Commodities suffer choppy week amid US economic gloom

Commodity prices faced choppy trade this week, hit by spreading concern that the United States economy has run into serious trouble after publication of a dismal payrolls report.

"It has been a very volatile week with choppy trading conditions across the markets," said Sucden commodities analyst Myrto Sokou.

"Fairly disappointing figures from the US regarding poor manufacturing, construction and employment data weighed heavily on the market sentiment and confirmed a slowdown in the economy.

"However, on the other hand, the weak US dollar provides strong support to oil and base metals prices, holding prices at fairly high levels."

Continued Middle East unrest, with an upsurge of violence in Yemen, highlighted the political risk posed by popular unrest across the region.

Dealers said news late Friday that the European Union, the International Monetary Fund and the European Central Bank were ready to offer indebted Greece fresh aid and had cleared the next loan tranche under its 2010 debt bailout should ease some concerns in the markets over the eurozone outlook.

OIL: Oil prices fell on Friday as traders absorbed a much weaker-than-expected non-farm payrolls report in top crude consumer the United States.

The US economy created just 54,000 net new jobs in May, only one-quarter of the February-April pace and well short of forecasts for 169,000, while the unemployment rate edged up to 9.1 percent, the Labor Department said.

The private sector, expected to drive the economy as governments slash spending, added only 83,000 positions, one-third the rate of the previous three months.

Friday's report confirmed the sharp slowdown in economic growth since the beginning of 2011.

"The data ... strongly suggested that the recovery has hit its second 'soft patch' which, for an expansion that is less than two years old, is troubling to say the least," said Capital Economics analyst Paul Ashworth.

Markets have been battered by a series of grim US indicators on jobs and manufacturing.

Adding to the mix, Moody's warned Thursday that United States faces a credit review and potentially crippling downgrade if the national debt limit, currently at $14.29 trillion, is not raised within weeks.

Prices took a hit after Wednesday's news that US crude reserves jumped 2.9 million barrels in the week ending May 27, confounding market expectations of a drop.

Worsening violence in Yemen, near to key oil routes, stoked fears of spreading unrest across the crude-rich Middle East and North Africa region.

Traders are looking ahead to a meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Vienna on June 8 when the 12-nation cartel is forecast to hold crude production levels unchanged as it balances the possibility of a weak global economy and unrest in the Middle East.

Libyan Oil Minister Shukri Ghanem has meanwhile resigned and left Libya to join the uprising against Moamer Kadhafi's regime. Ghanem, head of the state-run National Oil Corporation, had been Libya's OPEC representative for years.

Libya was producing 1.69 million barrels a day before the unrest but this has long since almost ground to a halt.

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in July rose to $115.12 a barrel from $114.67 the previous week.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for July eased to $99.75 a barrel from $100.35.

PRECIOUS METALS: Gold enjoyed solid gains, garnering support from its status as a safe haven in uncertain economic times.

"Amid these tentative economic conditions, gold continues to remain the highlight of the week, posting fresh gains, as uncertain economic conditions in the eurozone, Yemen and the United States prompt investors to more safe choices," said Sokou at the Sucden brokerage.

By late Friday on the London Bullion Market, gold rose to $1,540 an ounce from $1,533 the previous week.

Silver sank to $35.19 an ounce from $37.69.

On the London Platinum and Palladium Market, platinum climbed to $1,807 an ounce from $1,779.